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2010 (4) TMI 294 - HC - Central ExciseCenvat Credit – clearance as such - Sale of capital goods – reversal of cenvat credit - The Respondent used the said machinery till 2003 and sold the same in May’ 2003 after payment of duty of Rs. 32,000/- i.e. 16% on the sale price Rs. 2,00,000/-. The Respondent paid duty on the transaction but the Revenue formed an opinion that Respondent should pay duty equal to Cenvat Credit availed at the time of purchase of the machinery. – originally credit availed was Rs. 1.30 Lacs – Held that: - The capital goods loose their identity as capital goods only when after use over a period of time, the same has become in-serviceable and fit to be scrapped. The object of Cenvat Credit on capital goods is to avoid the cascading effect of duty. If even after use for a couple of years, the Cenvat Credit is required to be reversed then it would certainly defeat the object of the scheme. To avoid misuse of the scheme in the Rules, it has been provided that if the machines are cleared as such the Assessee shall be liable to pay duty equal to amount of Cenvat Credit availed. The machines which are cleared after utilization cannot be treated as machines cleared as such. - . The machine cleared after putting into use for nine years cannot be treated as Cleared ‘as such’. Insertion of proviso w.e.f. 13.11.2007 makes it clear that there is difference between machines cleared without putting into use and cleared after use – decided in favor of assessee
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